| Owed obligation | Client (represented) | Customer (not represented) |
|---|---|---|
| Loyalty and advocacy | Yes | No |
| Confidentiality | Yes | No |
| Honesty and fair dealing | Yes | Yes |
| Disclosure of known material defects | Yes | Yes, on the property |
Glossary · Agency & representation
Fiduciary Duty
Fiduciary duty is the set of legal obligations a real estate agent owes to the client they represent. It requires the agent to put the client's interests ahead of their own and to act with the utmost good faith and loyalty. Core duties include loyalty, obedience, disclosure, confidentiality, reasonable care, and accounting for funds and documents.
How does fiduciary duty work?
Once an agency relationship forms, the agent must serve the client's interests above their own. That means following lawful instructions, disclosing material facts, keeping confidences, exercising care, and accounting honestly for money and paperwork throughout the transaction.
These duties are often summarized with memory aids like OLD CAR: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care. Together they define what genuine representation looks like.
The duties continue for the life of the relationship, and confidentiality often extends even after the deal closes.
Why does fiduciary duty matter?
Fiduciary duty is the reason having representation is valuable. A represented client gets loyalty, confidentiality, and advocacy. A customer who is not represented, such as the other party, is owed only honesty and fair dealing, not the full protection of these duties.
Understanding the difference helps buyers and sellers know what to expect. If you are not the agent's client, do not assume they are guarding your interests or keeping your goals confidential.
What happens if an agent breaches fiduciary duty?
A breach, such as hiding a conflict, steering a client for personal gain, or leaking confidential information, can expose the agent to license discipline, loss of commission, and civil liability. Clients harmed by a breach may have legal claims against the agent and brokerage.
Remedies and enforcement vary by state and situation, but breaches are treated seriously because clients rely heavily on the agent's honesty and loyalty. Document concerns and consult a professional if you suspect a violation.
Worked example. For example, a seller's agent learns the seller is willing to accept 380,000 dollars but the listing shows 400,000. Loyalty and confidentiality forbid the agent from telling a buyer that lower number. Disclosing it to gain a quick sale would breach fiduciary duty and could cost the agent their commission or license.
Common mistakes with Fiduciary Duty
- Assuming an agent owes you fiduciary duty when you are the other party and not their client.
- Sharing your top price or deadline with the opposing side's agent, who is not bound to keep it confidential for you.
- Believing honesty and fiduciary loyalty are the same; every party gets honesty, but only clients get loyalty.
- Expecting confidentiality to protect you after signing away representation through dual agency.
- Failing to get representation in writing, leaving it unclear whether the agent owes you full duties.
Related terms
Term
Listing Agreement
A contract between a seller and a brokerage authorizing the agent to market and sell the p
Define TermBuyer Representation Agreement
A contract in which a buyer hires an agent to represent them in finding and purchasing a p
Define TermDual Agency
When a single agent or brokerage represents both the buyer and the seller in the same tran
Define TermDisclosure
The seller's legal obligation to reveal known material defects and facts about a property.
DefineFiduciary Duty FAQ
What are the core fiduciary duties?
They are commonly listed as loyalty, obedience to lawful instructions, disclosure of material facts, confidentiality, reasonable care and diligence, and accounting for funds and documents. Some states describe them slightly differently, but the theme is placing the client's interests first with good faith.
Does an agent owe fiduciary duty to both sides?
Only if they represent both, and then the duties are limited. A single-side agent owes full fiduciary duty to their client and only honesty to the other party. A dual agent must stay neutral, which caps loyalty and confidentiality for each side.
Do fiduciary duties end at closing?
Most active duties end when the transaction closes and the relationship ends. Confidentiality, however, often continues afterward, meaning the agent should not later reveal your private financial or negotiating information. Specific rules on lasting duties vary by state.
What is the difference between a client and a customer?
A client is represented and is owed full fiduciary duties. A customer is not represented and is owed honesty and fair dealing but not loyalty or confidentiality. Knowing which role you occupy tells you how much protection to expect.
Can I sue an agent for breaching fiduciary duty?
Possibly. Clients harmed by a breach may pursue license complaints and civil claims, and the agent could lose commission. Remedies depend on the facts and your state's law. Consult a real estate attorney if you believe a serious breach occurred.
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